Rainbow Merchandising Company completed the following transactions during July, 2020

July 2 Issued invoice no. 9013 for sale of merchandise on account to Gary Co., P16,400.
3 Purchased merchandise from Dolly Co., P10,000, credit terms 3/10, 2/60.
5 Sold merchandise for cash, P4,308
5 Issued check no. 235 to purchase furniture for cash, P8,740.
6 Purchased merchandise on account from Razel Co., P3,650.
7 The owner, Mr. Rain invested additional cash of P70,000.
8 Received interest revenue from bank deposit of P1,775.
9 Issued invoice no. 9014 to Echo Co., P22,200. FOB destination, P2,500. Credit terms:2/10, n/30.
10 Purchased merchandise and issued check no. 236 amounting to P12,000. Terms: 5% trade
discount. FOB shipping point, P2,000
11 Purchased supplies on account from Maia, P4,000. Terms: n/eom.
12 Received P16,072 from Gary Co. in full settlement of her account.
13 Issued check no. 236 to pay Dolly the net amount owed from July 3.
13 Purchased supplies on account from Mark Co., P1,764. Terms: n/eom.
14 Sold merchandise on account to Echo Co. issuing invoice no. 9015 for P3,550.
15 Issued check no. 237 to pay salaries of employees for the period of July 1-15, P8,500.
15 Sold merchandise on account to Rey Co. issuing invoice no. 9016 for P2,660.
16 Issued check no. 238 to pay Razel Co. the net amount owed on July 6, P3,577.
16 Purchased furniture on account from Dolly Co., P3,750.
17 Issued credit memo to Rey Co. for P2,660 for defective merchandise returned by the buyer.
18 Issued invoice no 9017 to Gary Co., P1,428. Trade discount of 10% is granted. Terms: 5/15, n/30.
19 Received a full collection from Echo Co. in full settlement of its account from July 9.
20 Purchased merchandise from Razel Co., P8,188. Credit terms net 30days
22 Purchased merchandise on credit from Dolly Co.P2,580.
22 Issued check no. 239 to pay for insurance coverage, debiting Prepaid Insurance for P4,000.
24 Sold supplies to an employee for cash, P2,216 at cost.
25 Issued check no. 240 to pay utilities, P5,812.
26 Sold merchandise on account to Rey Co., issuing invoice no. 9018 for P4,250.
27 Issued check no. 241 amounting P3,500 for payment of Mr. Rain personal liability to a friend.
28 Purchased merchandise from Mark Co., P21,700.
29 Refund cash to Mark Co for the returned of damaged merchandise, P 2,700.
29 Sold goods to Echo Co. issuing invoice no. 9019 for P5,984.
30 Issued check no. 241 to pay Mark Co., P1,764 on account from July 13.
31 Collected the full amount due from Gary Co.
31 Issued check no. 242 to pay the salaries for the period of July 16-31, P19,388.
Instructions:
A. Open the following ledger accounts using the following account numbers given:

B. Open these accounts in the subsidiary ledgers:

Accounts Receivable Subsidiary ledger
Echo Co.; Gary Co.; Rey Co.
Accounts Payable Subsidiary ledger
Dolly Co.; Mark Co.; Razel Co.
C. Enter the transaction in a Sales Journal, Cash Receipt Journal, Purchases Journal,
Cash Disbursement Journal, and General Journal

Total each column of the special journals. Check the equality of the debit and the credits. Show the
D. total debits equal to total credits in each special journal.

Post daily to the accounts receivable subsidiary ledgers and accounts payable subsidiary ledgers the
E. jounal entries affecting the receivables and payables.
F. Balance the total of the customer account balances in the accounts receivable subsidiary ledger
against the Accounts Receivable in the general ledger. Do the same with accounts payable
subsidiary ledger and Accounts Payable in the general ledger.
Then prepare the summary or schedule of
1) Accounts Receivable
2) Accounts Payable
 Sales Journal Page 1
DR. Accts. Re'ble
Date Inv. No. Account Debited/ Name of the Debtors P/R
CR. Sales
June 2 1 Echo Co. 5,000.00
8 2 Gary Co. 10,000.00
15,000.00
(113) '(411)
Purchase Order (PO)
Delivery Receipt-Sales Invoice - Goods
Official Receipt to issue for the cash collection

Sale on account

Cash Invoice
Sales Journal Sale of merchandise on account. Accounts Receivable
Sales

Purchases Journal All types of Purchases on account

1) Merchandise Purchases
Accounts Payable

2) Supplies Supplies
Accounts Payable

3) Chairs and tsble Furnitures & Fixtures

Accounts Payable

4) PC & printer Euipment

Accounts Payable

Cash Receipts Journal All types of cash receipts transaction

1) Cash Investment Cash
Capital

2) Collection of receivable Cash

Accounts Receivable

4) Cash proceeds from loan Cash

Notes payable

5) Cash sales of merchandise Cash

Sales

6) Cash refund from the returned Cash

goods purchased for cash Purchased Rets & Allows

Cash Payments Journal

General Journal
xx
xx

xx
xx

xx
xx

xx
xx

xx
xx

xx
xx

xx
xx

xx
xx

xx
xx

xx
xx
.

Special Journal
1 Sales Journal sale of merchandise on credit or account
Accounts Receivable xx
Sales xx

2 Purchases Journal All types of purchases on credit or account.

a) Purchased of Merchandise on account, P10,000

b) Purchased of supplies on credit, P3,000

c) Purchased chairs & table on credit, P5,000

3 Cash Receipts Journal All types of cash receipts

1) Cash sales of merchandise, P20,000

2) Collection receivable,P8,000

3) Cash investment, P100,000

4) Cash refund for the defective merchadise purchased.

amounting, P1,000

5) Proceeds from the loan, P50,000

6) Sale for cash of the used equipt,P 3,500

4 Cash Disbursements Journal All types of cash payments

or
Cash Payments Journal a) Purchased of Merchandise ,P10,000
 B) Payment of salaries, P3,000

c) Payment of loan, P20,000

d) Cash withdrawal of the owner for personal use.

e) Cash refund for the defective mdse sold .

f) Purchased of suppiles , P2,000

General Journal Adjusting entries

Closing Entries
Debit / credit memo Debit Memo Buyers Accounts Payable
Reversing Entries

Credit Memo Seller Sales Returns & Allowanc

Sale of FF on credit AR

SJ Accounts Receivable 2000

Sales

GJ Notes Receivable 2000

Accounts Receivable
Purchases 10000
Accounts Payable 10000

Supplies 3000
Accounts Payable 3000

Furniture & Fixtures 5000 Equipt 12,000

Accounts Payable 5000 Accounts Payable

Cash 20,000
Sales 20,000

Cash 8,000
Accounts Receivable 8,000

Cash 100,000
Capital 100,000

Cash 1,000
Purchased Returns & Allowances 1,000

Cash 50,000
Notes Payable 50,000

Cash 3,500
Accum Depreciation 2,500
Equipment 6000 6,000

Purchases 10,000
Cash 10,000
 Salaries Expense 3,000
Cash 3000

Accounts/Notes Payable 20,000

Cash 20,000

Drawing 1,000
Cash 1,000

Sales Returns & Allowances 2,000

Cash 2,000

Supplies 2000
Cash 2000

Accounts Payable
Purchase Returns & allowances

Sales Returns & Allowances

Accounts Receivable

2000

2000
12,000
 Purchases Journal
Sundry
Supplies Purchases
Date Account Debit Accounts
PR Debit Debit Debit
Jun 1 10,000.00
5 2,000.00
10 Furnitures & Fixtures 114 4,500.00
15 Equipment 116 6,000.00
10,500.00 2,000.00 10,000.00
(418)
 Accounts Payable (211) FF (114)
Accts Payable
22,500.00 4,500.00
Credit
10,000.00
2,000.00
4,500.00
6,000.00
22,500.00
(211)
Purchases 418 Equipt (116)
10,000.00 6,000.00
 Cash Receipts Journal
Sundry Accounts
Sales
Date Account Credited Accounts Receivable
PR Credit Credit Credit
June 15 Echo Co. 3,000.00
 Sales
Cash
Discount Notes Receivale
Debit Debit Sales
3,000.00
 Cash Payments Journal
Sundry Salaries Accounts
Date Account Debited PR Accounts Expense Payable
Debit Debit Debit
 Purchases
Purchases Cash
Discounts
Debit Credit Credit
 Adjusting Entries Reversing Entries

1 Accrued Expense Expense Exp. Payable

Exp. Payable Expense

2 Accrued Revenue Rec'ble Income

Income Rec'ble

3 Prepaid Expense
Expense Method Prepaid Expense Expense
Expense Prepaid Expense

4 Unearned Revenue
Revenue Method Revenue acct Unearned Revenue
Unearned revenue Revenue aact
 Dec 31 falls on Thurs. Slary are paid every Saturday of 6,000.

No reversing entries With reversing entries

Dec. 31 Salaries Expense 4,000.00 Dec. 31 Salaries Expense

Salaries Payable 4,000.00 Salaries Payable
Mon to Thur Mon to Thur
6,000 X 4 /6 6,000 X 4 /6

Salaries Payable 4,000.00 Jan-01 Salaries Payable

Jan. 2 Salaries Expense 2,000.00 Salaries Expense
Cash 6,000.00
Jan. 2. Salaries Expense
Cash
4,000.00
4,000.00

4,000.00
4,000.00

6000
6000
 GENERAL JOURNAL Page No. 1
DATE DESCRIPTIONS PR DEBIT CREDIT
2020 CLOSING ENTRIES
Dec. 31 Sales 40,000.00
Interest Income 2,000.00
Purchase Discounts 500.00
Purchase Ret & Allow 1,000.00
Income Summary 43,500.00
To close the accounts with credit balances

31 Income Summary 23,900.00

Sales Discounts 700.00
Sales Returns 1,200.00
Freight In 2,000.00
Purchases 12,000.00
Salaries Expense 4,000.00
Rent Expense 2,000.00
Utilities Expense 1,000.00
Representation Expense 800.00
Miscellaneous Expense 200.00
To close the nominal accts with debit bal

31 Income Summary 21,600.00

A, Capital 21,600.00

31 A, Capital 5,000.00
A, Drawing 5,000.00

June 13 Sales Returns and Allowance 500.00

Accounts Receivable-Gary Co. 500.00
 nominal accounts
Income Summary real account
23,900.00 43,500.00
3,000.00 5,000.00
21,600.00
48,500.00 48,500.00

Merchandise inventory 5,000.00

Income Summary 5,000.00

Income Summary 3,000.00

Merchandise Inventory 3,000.00
R,COGS,Oexp, INC Summary Drawings
A,L, C

cash
AR
Accounts Receivable Subsidiary ledger Accounts Paya
Echo Co.
Date Items PR Debit Credit Balance Date
June 2 Inv.#1; 2/10,n/30 SJ1 5,000.00 5,000.00
15 collection CRJ1 3,000.00 2,000.00

Gary Co.
Date Items PR Debit Credit Balance Date
June 8 Inv. #2; 5/10, n/30 SJ1 10,500.00 10,500.00
13 CM#01 GJ1 500.00 10,000.00

Rey Co.
Date Items PR Debit Credit Balance Date

RAINBOW MECHANDISING COMPANY RAINBOW ME

SCHEDULE OF ACCOUNTS RECEIVABLE SCHEDULE O
July 31, 2020 Ju

Name of Debtors Amount Name of Cred

Echo Co. 2,000.00
Gary Co. 10,000.00
Rey Co.
Total 12,000.00
 Accounts Payable Subsidiary ledger
Dolly Co.
Items PR Debit Credit Balance

Mark Co.
Items PR Debit Credit Balance

Razel Co.
Items PR Debit Credit Balance

RAINBOW MECHANDISING COMPANY

SCHEDULE OF ACCOUNTS PAYABLE
July 31, 2020

Name of Creditors Amount

Dolly Co.
Mark Co.
Razel Co.
Total
 ABC Merchandising
Income Statement
For the Year Ended December 31, 2020

Gross Sales 40,000.00

Less: Sales Discounts 700.00
Sales returns & Allowance 1,200.00 1,900.00
Net Sales 38,100.00
Less: Cost of Goods Sold
Merchandise Inventory , Jan. 1 3,000.00
Purchases 12,000.00
Freight In 2,000.00
Total Cost of Goods Purchased 14,000.00
Less: Purchase Discounts 500.00
Purchase Ret. and Allow 1,000.00 1,500.00
Net Purchases 12,500.00
Goods available for sale 15,500.00
Less: Mechandise inventory,Dec. 31 5,000.00
Cost of Goods Sold 10,500.00
Grosss Profit 27,600.00
Add: Interest Income 2,000.00
Income from all sources 29,600.00
Less: Operating Expenses
Selling Expenses
Sales Salaries 2,000.00
Store Supplies 1,100.00
Depreciation-Store Equipment 1,000.00
Misc Expense-Selling 100.00
Total Selling Expenses 4,200.00

Administrative/ General Expenses

Office Salaries 1,000.00
Rent Expense 1,000.00
Utilites Expense 900.00
Representation Expense 800.00
Misc Expense-Administrative 100.00
Total Administrative Expense 3,800.00
Total Operating Expenses 8,000.00
Net Profit 21,600.00

A, Capital 15,000.00
Add: Net Income 21,600.00
Total 36,600.00
Less: Withdrawals 5,000.00
A, Capital 31,600.00
Statement of financial Position
Income Statement
Capital Statement
Statement of Cash Flows
Disclosure of Notes
 Sales 40,000.00
Interest Income 2,000.00
Purchase Discounts 500.00
Purchase Ret & Allow 1,000.00
Income Summary 43,500.00
To close the accounts with credit balance

Income Summary 23,900.00

Sales Discounts 700.00
Sales Returns 1,200.00
Freight In 2,000.00
Purchases 12,000.00
Salaries Expense 4,000.00
Rent Expense 2,000.00
Utilities Expense 1,000.00
Representation Expense 800.00
Miscellaneous Expense 200.00

Income Summary 21,600.00

A, Capital 21,600.00

A, Capital 5,000.00
A, Drawing 5,000.00

Salaries Expense 4,000.00

Rent Expense 2,000.00
Utilities Expense 1,000.00
Representation Expense 800.00
Miscellaneous Expense 200.00
8,000.00

15,000.00 21,600.00
31,600.00 5,000.00
16,600.00 16,600.00
 Account Titles Trial Balance Adjustments Income Statement
DR CR DR CR DR
1,000.00 80.00
200.00 50.00
500.00 1,000.00
300.00
Merchandise inventory 100.00 120.00
Sales
Sales Discounts xx
Sales Returns xx
Purchases xx
Purchase Returns and Allowances
Purchase discounts
Freight In xx
Income Summary 120.00 100.00 120.00
All Oprating exp xx
10,000.00
Net Profit 5,000.00
15,000.00

Merchandise inventory 100.00

Income Summary 100.00

Income Summary 120.00

Merchandise Inventory 120.00
Income Statement Balance Sheet
CR DR CR

assets
100.00 120.00 ADA direct extension method
xx Drawing Adepr
Liabilities
Capital

xx
xx

100.00

15,000.00 25,000.00 20,000.00

5,000.00
15,000.00 25,000.00 25,000.00
 GENERAL LEDGER
CASH Acct no. 111
DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

ACCOUNTS RECEIVABLE Acct no. 113

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT
SJ1 7,000.00 1,000.00
8,000.00 2,000.00
5,000.00 3,000.00
20,000.00 1,500.00
- 8,000.00 500.00
12,000.00 8,000.00

SUPPLIES Acct no. 119

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

PREPAID INSURANCE Acct no. 117

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

FURNITURE Acct no. 151

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT
 EQUIPMENT Acct no. 152
DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

ACCOUNTS PAYABLE Acct no. 211

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

RAIN, CAPITAL Acct no. 311

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

RAIN DRAWING Acct no. 312

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT
AL LEDGER
INTEREST REVENUE Acct no. 400
DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

SALES Acct no. 411

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT
July 31 SJ1 15,000.00

SALES RETURNS AND ALLOWANCES Acct no. 413

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

SALES RETURNS AND ALLOWANCES Acct no. 413

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

PURCHASES Acct no. 511

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT
 FREIGHT IN Acct no. 514
DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

PURCHASE DISCOUNTS Acct no. 51

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

PURCHASE RETURNS AND ALLOWANCES Acct no. 513

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

SALARIES EXPENSE Acct no. 531

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

UTILITIES EXPENSE Acct no. 541

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT

TRANSPORTATION OUT Acct no. 542

DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT
Less: Cost of Goods Sold
Merchandise Inventory , Jan. 1 3,000.00
Purchases 12,000.00
Freight In 2,000.00
Total Cost of Goods Purchased 14,000.00
Less: Purchase Discounts 500.00
Purchase Ret. and Allow 1,000.00 1,500.00
Net Purchases 12,500.00
Goods available for sale 15,500.00
Less: Mechandise inventory,Dec. 31 5,000.00
Cost of Goods Sold 10,500.00
Gross Sales 40,000.00
Less: Sales Discounts 700.00
Sales returns & Allowance 1,200.00 1,900.00
Net Sales 38,100.00
Less: Cost of Goods Sold
Merchandise Inventory , Jan. 1 3,000.00
Purchases 12,000.00
Freight In 2,000.00
Total Cost of Goods Purchased 14,000.00
Less: Purchase Discounts 500.00
Purchase Ret. and Allow 1,000.00
Net Purchases 12,500.00
Goods available for sale 15,500.00
Less: Mechandise inventory,Dec. 31 5,000.00
Cost of Goods Sold 10,500.00
Grosss Profit 27,600.00

ABC Mechandising
Statement of Financial Position
December 31, 2020

Assets
Current Assets:
Cash 8,000.00
Accounts Receivable 10,000.00
Less: Allowance for Doubtful Accounts 1,000.00 9,000.00 net realizable value
Merchandise Inventory (end) 5,000.00
Office Supplies 500.00
Store Supplies 1,000.00
Prpeaid Insurance 2,000.00
Total Current Assets 25,500.00

Non Current Assets:

Land 26,000.00
Building 10,000.00
Less: Accum. Depreciation-Bldg. 2,000.00 8,000.00
Office Equipment 6,600.00
Less: Accum Depr. Off Eqt 1,000.00 5,600.00
Total Non current Assets 39,600.00
Total Assets 65,100.00

Liabilities
Current Liabilities:
 Accts Payable 3,000.00
Notes Payable 5,000.00
Accrued Salaries 1,000.00
Unearned Revenue 1,000.00
Total Current Liabilities 10,000.00

Long term Liabilities

Notes Payable, due in 2023 3,500.00
Mortgage Payable 20,000.00
Total Long term liabilities 23,500.00
Total Liabilities 33,500.00

A, Capital 31,600.00
Total Liabilities and Capital 65,100.00
 COGS 10,500.00
MI,end 5,000.00
available 15,500.00

Purchases 12,000.00
Freight In 2,000.00 14,000.00
PD 500.00
PRA 1,000.00 1,500.00 12,500.00
3,000.00

Availbale for sale 15,500.00

MI,beg 3,000.00
Net Purchases 12,500.00
Add: PD+PRA 1,500.00
goods purchased 14,000.00
Less: Freight 2,000.00
Purchases 12,000.00

depletion
1 Accrued Expense
2 Accrued revenue
3 Prepaid expense
Asset Method
Expense Method
4 Unearned Revenue
Revenue Method
Liability Method
5 Depreciation of Fixed Assets
D=(cost-residual value)/ est life

6 Doubtful Accounts
Doubtful Accounts Expense XX
Allowance for DA XX
ADA ADA
WRITE OFF BEG minus 2000 1000
EXPENSE/ADJ 6,500 Exp
add: RECOVERY 1500
END 7000

7 Merchandise Inventory end

Income Summary end

Income Summary beg

Merchandise Inventory beg